The late 19th century saw a major transformation in the way in which American business was structured and operated, especially concerning the corporation's larger size and capitalization. For example, U.S. Steel was valued at $1 billion.
Before the Civil War, almost all businesses were owned and managed by the same people. In the modern corporation, professional managers led the companies.
As businesses grew larger, they needed new bureaucratic hierarchies to provide central coordination. Businesses created formal administrative structures, such as purchasing and accounting departments. The emergence of professional managers helped to create a middle class made up of white-collar employees of corporations.
Yet another sweeping change in business operation was the corporation's increased size and geographical scale. Corporate enterprises carried out their functions in widely scattered locations. As early as 1900, General Electric had plants in 23 cities.
The new corporations also engaged in more kinds of business operations. Businesses typically grew as a result of vertical and horizontal integration. When a company integrated vertically, it brought together various phases in the process of production and distribution. For example, U.S. Steel mined iron ore, transported it to its mills, turned it into steel and manufactured finished products, and shipped the products to wholesalers.
When a company integrated horizontally, it expanded into related fields of business. For example, U.S. Steel produced a vast array of metal goods.
Business began to consolidate into progressively larger economic units.
Big business also had its problems. Working conditions in many factories were appalling. Labor conflicts occurred between workers and management. Businesses were accused of price fixing, stock watering, and other abuses.
The federal government introduced regulation in the late 19th and early 20th centuries to curb the abuses of corporate power.
Source: The Corporate Revolution
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